BRP(US:DOOO)2025-08-29 14:00Financial Data and Key Metrics Changes - The company reported revenue of $1.9 billion, a 4% increase year-over-year, primarily driven by stronger ORV shipments, offset by lower personal watercraft deliveries [20][4] - Normalized EBITDA was $213 million, and normalized EPS was $0.92, which included approximately $0.35 from tax credits recorded in the quarter [20][4] - Free cash flow from continuing operations reached $100 million, with over $270 million in cash at the end of the quarter, indicating a solid balance sheet [20][4] Business Line Data and Key Metrics Changes - North American powersports retail decreased by 11%, with Canada showing a 4% growth driven by ORV, while the U.S. experienced a 15% decline [5][6] - Year-round product revenue increased by 13% to $1.1 billion, driven by higher ORV shipments following last year's inventory reduction plan [13] - Seasonal product revenues decreased by 13% to $470 million, mainly due to a planned reduction in personal watercraft shipments [16] Market Data and Key Metrics Changes - Retail in Latin America grew by 22%, led by strong performance in ORV, while Asia Pacific saw a 5% increase, marking the first growth in two years [6] - EMEA experienced a 13% decline in retail, consistent with industry trends [6] - The overall global industry trend showed slight improvement compared to previous quarters [7] Company Strategy and Development Direction - The company announced a definitive agreement for the sale of Manitou, expected to close soon, indicating strategic divestment [4] - The introduction of new products, including the new generation Can Am Defender and expanded electric vehicle offerings, is aimed at gaining market share [9][11] - The company is focused on operational efficiency and managing shipments to improve network inventory positions [19][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the second half of the year, citing improved visibility on expected deliveries and a strong reception for new products [23][24] - The macroeconomic environment remains uncertain, but the company is well-positioned to capture demand upside when market conditions improve [23][24] - Management highlighted the importance of adapting to tariff situations and maintaining competitive pricing strategies [34][36] Other Important Information - The company is experiencing a 20% year-over-year reduction in network inventory, which is expected to enhance competitiveness and protect brand value [21][22] - The guidance for fiscal year 2026 includes revenues of $8.15 billion to $8.3 billion, normalized EBITDA of $1.04 billion to $1.09 billion, and normalized EPS of $4.25 to $4.75 [25][26] Q&A Session Summary Question: What are the tariff scenarios that you're contemplating? - Management indicated that they are closely monitoring the USMCA and are prepared to adapt to any regulatory changes [33][34] Question: Can you shed light on your plans to mitigate the tariff exposure? - The company is actively working on sourcing strategies and production adjustments to minimize tariff impacts [36][37] Question: What does the retail outlook look like for the second half? - Management expects retail to improve in the second half, particularly in ORV, as inventory levels are cleaner and new products are introduced [46][68] Question: How do you see the revenue profile outlook with the alignment of wholesale and retail? - Management noted that destocking has had a significant revenue impact, but they anticipate a recovery as inventory levels normalize [52][53] Question: What are the expectations for margins going forward? - The company expects to see margin improvements due to reduced promotional activity and better inventory management [60][61] Question: What are the factors driving the discrepancy in retail sales between Canada and the U.S.? - Management attributed the differences to macroeconomic conditions, including inflation and consumer confidence in the U.S. compared to Canada [110][112]